Commenting on the second quarter results, Dr. Zhenyu Zhou, CEO of Actions Semiconductor said, "Revenue in the second quarter came in at the high end of our expectations and we achieved a meaningful improvement in gross margin. Sales of our multimedia products performed well, driven by strong demand for our Bluetooth 4.0 solutions for Bluetooth enabled audio and other related products as well as stronger than anticipated sales of our video boombox solutions and other traditional multimedia products. In our application processor business, conditions in the worldwide tablet market remained challenging, reflecting a maturing market fraught with intense competition. Although demand for smart devices such as virtual reality devices, netbooks, digital signage, POS machines and smart micro-projectors is strong, volumes of our 32-bit and 64-bit smart product SoCs based on 28 nm process technology have ramped more slowly than anticipated due to longer design and qualification times for some of these products.

"Looking ahead, we continue to anticipate revenue growth for the full year 2015, but at a slower pace than our previous expectations. Our Bluetooth solutions, led by our new single chip Bluetooth 4.0 SoC for Bluetooth enabled audio and related products are rapidly gaining market share with healthy growth in volume. We will expand our presence in this fast growing market with our upcoming Bluetooth 4.0 headset solution. We remain confident that strong consumer demand will continue to drive adoption of our latest 32-bit and 64-bit chipsets based on 28 nm process technology for smart products such as digital signage, virtual reality devices and netbooks based on popular operating systems. We believe the open source intelligent hardware community will play an important role in the development of diversified smart products in the IoT market, and our new ActDuino 32-bit S500 and ActDuino 64-bit S900 open source SoCs and reference design platforms for Android and Linux target a wide range of leading edge smart connected products," Dr. Zhou concluded.

Second Quarter 2015 Results

All financial results are reported on a U.S. GAAP basis.

Revenue for the second quarter of 2015 was $13.7 million, as compared to revenue of $10.5 million for the first quarter of 2015, and $12.0 million for the second quarter of 2014.

Actions Semiconductor reported gross profit in the second quarter of $3.5 million, as compared with $2.5 million in the first quarter of 2015 and $2.2 million in the second quarter of 2014. Gross margin was 25.7% for the second quarter of 2015, compared to gross margin of 23.5% for the first quarter of 2015, and 18.4% for the second quarter of 2014. In the year ago period the Company recorded a write-down of certain slower moving inventory which reduced gross margin by about 7%.

Operating expenses in the second quarter of 2015 were $10.1 million, as compared to $9.5 million in the first quarter of 2015 and $10.0 million in the second quarter of 2014.

Research and development expenses were $7.3 million for the second quarter, as compared to $6.8 million in the first quarter of 2015 and $6.6 million in the second quarter of 2014. The year-over-year and quarter-over-quarter increases were mainly related to mask expenses associated with OTT set-top box and tablet SoCs. The Company expects full year R&D expenses in 2015 to be below 2014 levels.

General and administrative expenses were $2.2 million in the second quarter, as compared to $2.0 million in the first quarter of 2015 and $2.8 million in the second quarter of 2014. The quarter-over-quarter increase was due to normal seasonal fluctuations. The year-over-year decrease was related to a write-off of impaired intangible assets and an increase in consultant fees in the year ago period.

Selling and marketing expenses were $0.6 million for the second quarter, as compared to $0.6 million in the first quarter of 2015 and $0.6 million in the second quarter of 2014.

Operating loss for the second quarter of 2015 was $5.1 million, as compared to the operating loss of $7.0 million in first quarter of 2015 and the operating loss of $7.7 million in the second quarter of 2014.

Dividend income was $0.5 million for the second quarter of 2015, compared to nil for the first quarter of 2015, and $0.4 million for the second quarter of 2014. The quarter-over-quarter increase was due to cash dividends received from a cost-method investee company.

Interest income for the second quarter of 2015 was $1.7 million, up from $1.6 million in the first quarter of 2015 and down from $2.8 million in the second quarter of 2014. The year-over-year decrease was due to lower cash and interest bearing securities following the Dutch auction tender offer in September 2014.

Income tax expense was $0.5 million for the second quarter of 2015, compared to an income tax credit of $0.5 million in the first quarter of 2015 and an income tax credit of $0.9 million in the second quarter of 2014.

Net loss attributable to Actions Semiconductor's shareholders for the second quarter of 2015 was $3.7 million or $0.063 per basic and diluted American Depositary Share ("ADS"). This compares to net loss attributable to Actions Semiconductor's shareholders of $5.0 million or $0.085 per basic and diluted ADS, for the first quarter of 2015, and net loss attributable to Actions Semiconductor's shareholders of $3.5 million or $0.050 per basic and diluted ADS, for the second quarter of 2014.

Financial Condition

The Company ended the second quarter of 2015 with $155.7 million in cash and cash equivalents, together with time deposits, trading securities and marketable securities. Total current assets were approximately $184.8 million, and the Company had working capital of approximately $124.8 million and $45.0 million in short-term bank loans as of June 30, 2015.

Since the share repurchase program commenced in 2007, the Company has invested approximately $80.9 million in repurchasing its ADSs and ordinary shares, including $25.0 million representing the equivalent of 10.0 million ADSs repurchased through a Dutch auction tender offer in September 2014. As of June 30, 2015, the equivalent of approximately 34.9 million ADSs were repurchased. As of June 30, 2015, total number of outstanding ordinary shares (including ordinary shares represented by ADSs) was 350,821,721.

Business Outlook

The following statements are based upon management's current expectations. These statements are forward-looking, and actual results may differ materially. The Company undertakes no obligation to update these statements.

Based on current market trends, the Company expects revenue in the third quarter of 2015 to be in the range of $13.0 to $14.0 million . The Company continues to anticipate revenue growth for the full year 2015 but at a slower pace than previously expected due to declining demand in tablet market and longer than anticipated design and qualification times for SoCs targeting other types of smart devices and hardware.